Greetings from the Rocking Chair – October 2008

Retirees and the financial crisis

September 29, 2008 will go down in the history books as the first time the Dow Jones Industrial average dropped 777 points in one day. While not the highest daily percentage drop (that occurred on Black Monday, October 19, 1087 when the Dow fell 23%) it was certainly significant in light of the financial turmoil the United States and the world in general is experiencing.

I suppose numerologists could have a great time with this as triple 7’s are usually represented as lucky number especially in simplified slot machines in gambling establishments. From what I have read, holding 3 sevens in a game of Black Jack almost ensures a win since they add up to 21. The number 7 in scripture is often referred to God’s perfect number, the number of completion. I would also suspect that most of us would conclude there is no numerical significance to the events of that day.

Rocking Chair Wisdom doesn’t begin to represent itself as knowledgeable in the area of economics to easily understand everything that is happening in the financial arena, let alone to try to explain it to someone else. Like many other Americans, and from what we’ve read many economists, RCW doesn’t know the real answer.

For most of us in the “retired” community, we are just as concerned as those in the “non-retired” community about trying to maintain our current standard of living. Many retirees have taken jobs to supplement their retirement income and others have started their own businesses.

With credit markets becoming tighter, it may be more difficult for retirees to secure loans to grow their business or obtain favorable financing when purchasing vehicles or other durable goods.

As values in retirement funds decrease, at least short term, the ability to withdraw the necessary funds to satisfy your retirement dreams may be compromised.

Watching the news reports on American television could give one a false sense of the severity of the current financial problem. However, this crisis reaches beyond our shores and becomes a global problem. Financial institutions in other parts of the world are failing or are being propped up, bailed out, or rescued by their governments as well.

Dave Ramsey is a nationally syndicated talk show host, and many thousands of people have followed his advice and followed a path to recovery from debt. Now he has provided some advice for our nation’s leaders to consider in Three Steps to Change Our Nation’s Future and in The Common Sense Fix. In addition, you can read up on some of the debate going on related to the mark to market rule that is getting quite a bit of press here at Zacks Investment Research. If you don’t understand this accounting rule, CNNMoney.com has an interesting article.

$700 Billion has been the most quoted figure for the cost of the bail-out which is now being called a rescue. However, some have used figures up to $1.5 Trillion dollars. A lot of us have a difficult time conceptualizing those dollars when we may be trying to stretch our fixed income retirement and social security checks. To give you some perspective as to how much this affects the individual resident of the United States let’s assume the cost is $1 Trillion. With a US population of approximately 305 million people, this amounts to an approximate cost of $3,300 per person including men, women, and children, whether they pay taxes or not.

Once we get a handle on the bleeding and the pain associated with this disease, we need to identify and eradicate the root of the disease. There will be many committee hearings, task forces, and investigations all pointing to a “cause”. However, Rocking Chair Wisdom believes that when you strip everything away you will find the root of the problem is “Greed”. Money in and of itself is not evil. It is the “Love of Money” that is root of evil and results in the problems of today.

To say we are in troubling times as a nation would be a gross understatement. It is at this time that we are reminded of 2 Chronicles 7:14. When we go to the polls this November, let’s do so as an informed electorate seeking to adhere to the admonishment of 2 Chronicles 7:14 by humbling ourselves and turning from our wicked ways. If you are interested, here is a link to the Presidential Prayer Team web site as well as their Pray the Vote web site.

If you wish to do some reading about the candidates, take a look through the Rocking Chair Wisdom Store. Check out the Kindle wireless reading device category for some suggestions for wireless reading.

Remember, stresses and friction will help us become stronger, just as a plant becomes stronger by pushing through the dirt and by being buffeted by the wind, we will emerge stronger as individuals and as a nation.

 From Rocking Chair Wisdom

ENJOY your Life After Retirement